Is Character.AI shutting down? The bankruptcy explained, key dates and alternatives

“Character.ai remains up and running,” the company promised in its October 12 announcement. The same statement says it voluntarily filed for Chapter 11 to run a court-supervised sale: if no buyer is found, the platform will be shut down. And Disney’s $20 million covers neither the app nor your data.

What’s certain, what’s promised, what’s still unclear

Two things are on the record in the official documents: the bankruptcy case is open, and the service is running. Everything else depends on the court and on buyers.

Disney is buying a license, not the app

Disney had already paid $7.5 million before the filing, $2 million of it refundable. Its offer acts as a floor: others can bid higher. Most employees, starting with the CEO, are moving to Disney while keeping the service running, for up to five months from September 18, 2026.

What you can do right now

There’s no need to decide anything today: the service works and subscriptions continue. To stay in control, here are the useful steps, based on Character.AI’s help center.

• Check that everything works as usual: the service is available and billing is unchanged for now. The company says it will notify subscribers before any change to paid features.
• Export your data to keep a copy (how to do it): Profile, Profile settings, Account, Manage account and data, Export data. Allow 3 to 4 weeks; the link you receive by email is valid for 7 days.
• Delete your account only if that’s what you want (here’s how): it’s permanent and can’t be undone.
• Read the privacy policy: its “Business transfers” clause says the company may disclose certain information in connection with, or during negotiations of, any merger, sale of company assets, financing or acquisition of all or part of its business.
• Know your rights: depending on where you live, data protection laws such as the GDPR let you ask for some data to be erased or for a copy in a portable format.

Key dates to watch, if the judge confirms them

The timeline below comes from the October 12 and 13 filings. The first two dates are set; the others are proposals awaiting the court.

1. October 12, 2026

   Character Technologies, Inc. files for Chapter 11 in the Delaware bankruptcy court.

2. October 14, 2026

   First hearing before the judge, at 1:30 p.m. Eastern Time.

3. November 13, 2026

   Deadline to object to the sale.

4. November 20, 2026

   Deadline to submit a competing bid.

5. November 23, 2026

   Auction, if several bids compete for the assets.

6. November 24, 2026

   Court hearing to approve the sale.

7. December 17, 2026

   Final deadline to close the deal.

How the company got here

The CEO’s sworn declaration paints the picture of a heavily used, loss-making service.

In mid-2024, Google paid about $2.7 billion to rehire the founders and take a non-exclusive license to the technology. Computing costs, payroll, lawsuits and regulators eventually took their toll.

The personal injury lawsuits were settled in January 2026, according to the same declaration; one remains open, filed in California state court in August 2026 and alleging harm to a minor. The rules have also tightened: since November 24, 2025, open-ended chat has been removed for users under 18 in the United States, with other markets to follow.

In Europe, Italy’s data protection authority, the Garante, issued a decision in July 2026 on privacy notices and minors, with a fine. In the UK, the Information Commissioner’s Office opened an investigation on September 25, 2026 into the use of personal information.

Minors are at the heart of the case, in the lawsuits as in the new rules. Our article on AI companions looks at these relationships, and young people come first: 72% of American teens say they use an AI as a virtual companion.

Character.AI alternatives

If you don’t want to wait for the outcome of the sale, other services let you chat with AI characters. Before you move, check three things: whether you need an account, how much it costs, and what the rules are for content and minimum age.

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